Commissioner Of Income-Tax-I, Ludhiana v. M/S. Punjab Wool Combers Ltd., Ludhiana

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. ITA No. 168 of 2003Date of Decision: 9.9.2010 Commissioner of Income-Tax-I, Ludhiana Versus M/s. Punjab Wool Combers Ltd., Ludhiana ...Appellant ...Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- PRESENT: Mr. Rajesh Katoch, Advocatefor the appellant-Revenue --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act, 1961(for short “the Act’”) has been filed by the Revenue against the order dated11.11.2002, passed by the Income Tax Appellate Tribunal, ChandigarhBench ‘A’, Chandigarh (in short “the Tribunal”) in Income-tax Appeal No.416/CHANDI/1995, in respect of assessment year 1991-92. Briefly stated the facts of the case are that the respondent-assessee filed its return of income for the assessment year declaring netincome at Rs. 2,11,61,340/-. The return was processed under Section 143(1)(a) on 13.3.1992. The assessing officer made assessment underSection 143(3) on 28.3.1994 on total income of Rs. 2,44,90,456/- bydisallowing the following: i)On account of under valuation of closing stock of greeseclosing stock of greese = Rs. 53,810/- ii)On a/c of under valuation of closing Stock of Soft Wool Waste = Rs. 16,09,316/- The order of assessment passed on 28.3.1994 was later onrectified vide order dated 9.8.1994 by the assessing officer vide which netincome was assessed at Rs. 2,40,78,132/- whereby as a result of orderunder Section 154, deduction under Section 80HHC was enhanced to Rs.4,12,324/-. The assessee preferred appeal before the Commissioner ofIncome-tax (Appeals) (Central), Ludhiana {in short “CIT(A)”}. The CIT (A)vide order dated 22.3.1995 gave a relief under Section 80-I on Rs.10,483/-. The assessee filed appeal before the Tribunal raising variousgrounds and the learned Tribunal on a consideration of the matter,disposed of the appeal of the assessee vide order dated 11.11.2002(Annexure A-IV) whereby it reversed the order of the CIT(A) whereby thesaid appellate authority had upheld the action of the assessing officerrestricting the deduction under Section 80-I at Rs.69,53,199/- againstRs.86,11,550/- claimed by the assessee in the light of the provisions ofsub-sections 8 and 9 of Section 80-I. The Tribunal also directed to allowthe relief/proportionate deduction of premium payable on redemption ofdebenture. It is how the assessee has preferred the present appeal raisingthe following questions of law for determination by this Court: “1.Whether in the facts and circumstances of the case, theHon’ble Income-tax Appellate Tribunal was justified inreversing the order of the Commissioner of Income-tax(Appeals) in which CIT(A) upheld the action of theassessing officer restricting the deduction u/s 80-I atRs.69,53,199/- against Rs.86,11,550/- claimed by theassessee in the light of the provisions of sub-sections 8Hon’ble Income-tax Appellate Tribunal was justified inreversing the order of the Commissioner of Income-tax(Appeals) in which CIT(A) upheld the action of theassessing officer restricting the deduction u/s 80-I atRs.69,53,199/- against Rs.86,11,550/- claimed by theassessee in the light of the provisions of sub-sections 8 & 9 of Section 80-I? 2.Whether in the facts and the circumstances of the case,the Hon’ble Income-tax Appellate Tribunal was justifiedin directing the Assessing Officer to allow relief/proportionate deduction of premium payable onredemption of debenture?the Hon’ble Income-tax Appellate Tribunal was justifiedin directing the Assessing Officer to allow relief/proportionate deduction of premium payable onredemption of debenture? & 9 of Section 80-I? 2.Whether in the facts and the circumstances of the case,the Hon’ble Income-tax Appellate Tribunal was justifiedin directing the Assessing Officer to allow relief/proportionate deduction of premium payable onredemption of debenture?the Hon’ble Income-tax Appellate Tribunal was justifiedin directing the Assessing Officer to allow relief/proportionate deduction of premium payable onredemption of debenture? 3.Whether deduction may be allowed in respect of aliability which is to be crystallized in subsequent years inview of the terms and conditions attached to suchliability?liability which is to be crystallized in subsequent years inview of the terms and conditions attached to suchliability? 4.Whether premium payable on debenture after specifiedperiod on its redemption can be treated at par with theaccrual of interest?”period on its redemption can be treated at par with theaccrual of interest?” We have heard learned counsel for the appellant and haveperused the record. Reg. Question (1) The Tribunal while adjudicating the issue regardingdisallowance in terms of provisions of Section 80I(8) and (9) had reliedupon its earlier decision in the case of the assessee relating to assessmentyear 1990-91. In ITR No. 168 of 1996 relating to assessment year 1990-91, similar question has been answered against the revenue. In viewthereof, question (1) proposed by the revenue is answered against therevenue. Reg. Questions (2) to (4) These questions being inter-connected are taken up together.The Tribunal relied upon decision of the Apex Court in Madras IndustrialInvestment Corporation Ltd. v. Commissioner of Income Tax, (1997)225 ITR 802 (SC) holding that proportionate deduction of premium payableon redemption of debentures is admissible during the year. Nothing could ITA No. 168 of 2003 be shown that this judgment is not applicable to the facts of the presentcase. Accordingly, it is held that these are not substantial questions of law. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE September 09, 2010rkmalik/gbs (ADARSH KUMAR GOEL) JUDGE